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It’s all about the ESG (and RSG): Southwestern Energy and Kinder Morgan stroke a deal for gas transportation

In order to further its commitment to reducing emissions across the natural gas value chain, Southwestern Energy Co. recently signed an agreement with Kinder Morgan Inc. for the transportation of responsibly sourced natural gas (RSG) to the Northeast markets. Tennessee Gas Pipeline, a subsidiary of Kinder Morgan, will be carrying out this notion since Nov.1.

The term "RSG" refers to natural gas that has been produced by a well and transported by companies whose operations have been independently verified for meeting certain environmental, social, and governance standards, including those relating to methane emissions.

Southwestern is currently one of the biggest producers of natural gas and natural gas liquids in the United States. The exploration, production, and development of natural gas, natural gas liquids, and crude oil from the nation's most prolific and unconventional gas fields found in the Appalachian and Haynesville shale basins are its primary business.

At the moment, the company is a leader of the pack when it comes to responsibly sourced gas. The fact that in 2017 Southwestern had already certified its first well as responsibly sourced through a partnership with Project Canary certainly contributes to its reputation a fair bit. Even more so, since then, Project Canary was expanded to include Southwesterns' entire Appalachian Basin natural gas production.

Morgan, on the other hand, is an energy infrastructure company, which provides pipelines and terminals for safe and clean transportation of natural gas, gasoline, crude oil, CO2, and other products, as well as for adequate storing of petroleum products and chemicals.

Yet, this partnership does not come as a surprise.

Southwestern's president and CEO, Bill Way, believes responsibly sourced gas is essential to providing a low-carbon energy future. And creating cleaner energy for customers throughout the United States and beyond is one of the company's goals as well as the purpose of this innovative agreement with Kinder Morgan.

In terms of annual electricity generation, the distribution of the RSG to the Northeast markets is expected to power the equivalent of about 100,000 homes while reducing greenhouse-gas emissions to the equivalent of removing 5,000 internal combustion cars off the roads.

Southwestern and Morgan are pleased with such an arrangement, not to mention that they will enjoy some good press coverage out of it as well.

According to Tom Martin, Morgans' president of natural gas pipelines, this is just one of several RSG initiatives currently underway and aligns splendidly with their commitment to minimize methane emissions associated with the production and transportation, storage, and distribution of natural gas.

The two companies are also founding members of the ONE Future Coalition, a group of 50 industry giants working together to reduce methane emissions across the Natural Gas value chain to 1% (or less) by 2025. But the coalition already registered a methane intensity number of 0.334% in 2019, beating its own target by 67% ahead of time. It proves that the natural gas industry can simultaneously provide much-needed long-term renewable energy and also minimize methane emissions.

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Merger of Equals: Whiting and Oasis $6B Deal

The two Bakken shale producers announced in a joint statement on March 7 that they had reached an agreement to unite in a $6 billion "merger of equals." Combining these two companies will create a leading Williston Basin position with assets covering approximately 972,000 net acres, production of 167,800 boe/d, and an enhanced free cash flow generation that will generate capital returns to shareholders. A historic collapse in oil prices prompted both Whiting and Oasis oil companies to file for Chapter 11 bankruptcy protection in 2020. Thus, the merger can be viewed as a preventive measure to avoid going out of business.

Oxy Low Carbon Ventures and Enterprise Products Operating will partner in order to provide services to carbon emitters from Houston to Port Arthur, Texas, due to the development of CO2 transportation and sequestration. Enterprise would develop the CO2 aggregation and transportation network utilizing a combination of new and existing pipelines along with its expansive Gulf Coast footprint. The partnership’s assets include more than 50,000 miles of pipelines; over 260 million barrels of storage capacity for NGLs, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

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